Comprehensive  Ghana Oil and Gas news, information, updates, analysis

News in Brief

Oil prices remain weak as slowing demand adds to high output

  • SOURCE: | qwesa2big
  • oil moneyCrude oil prices remained under pressure on Tuesday as fears of slowing demand added to worries over near-record global production levels that have slashed prices by two-thirds since the middle of last year.

    Front-month U.S. West Texas Intermediate (WTI) futures CLc1 were trading at $36.83 per barrel at 0334 GMT, similar to Monday’s close after a more than 3 percent fall.

    The international benchmark Brent LCOc1 was at $36.67 per barrel, virtually unchanged from its last settlement but less than a dollar away from an 11-year low hit earlier in December.

    Both contracts are down by two-thirds since prices started tumbling in June 2014.

    While global output has been at or near record highs, demand has so far held up, preventing oil prices from falling even lower, but that may be about to change.

    Oil analysts JBC Energy said that oil product demand growth in Europe turned negative in October – a loss of 170,000 barrels per day (bpd) year-on-year – for the first time in 10 months and that diesel and gasoline demand growth in China, one of the strongest price supporters of the past year, was also slowing.

    “The demand situation does not support a return to a higher price environment,” said derivatives exchange operator CME Group.

    “China is still decelerating. Growth in emerging markets is slow. Europe may grow 1 percent to 2 percent in real GDP terms, the U.S. a little better, and Japan a little less. No major demand surges here,” it said.

    One change in oil trading has been that WTI flipped to a premium versus Brent CL-LCO1=R this month after the United States lifted a decades-old ban on exporting U.S. crude oil.

    Analysts expect this price structure to stay in place, especially should global markets suffer from slowing demand and a continuing oil surplus while domestic supplies in the United States tighten.

    “We expect (the) WTI-Brent spread to reach about $1, which was where spreads were before (the) U.S. ramped up its production,” Singapore-based brokerage Phillip Futures said.

    U.S. shale oil drilling soared from around 2010, but many producers have piled up huge amounts of debt and are now struggling to stay in business.

    “The ongoing low oil-price environment points furiously towards a rough 2016 for U.S. producers,” oil analysis firm ClipperData said, with some estimates pointing to a 500,000 bpd fall in U.S. production in 2016.

    However, with most analysts estimating global output to exceed demand by that amount to perhaps more than 2 million bpd, even such a U.S. cut would not be enough to rebalance markets.


    Leave a reply

    About Us
    Reporting Oil and Gas project was launched on 4th June 2009 at Takoradi, Western Region, Ghana by Penplusbytes ( with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector read more
    Twitter Activity Stream

    Partners We are proud to be associated with:

    Skip to toolbar